The key 2026/27 figures
From HMRC's rates and thresholds for 2026 to 2027:
| Threshold | Annual | Why it matters |
|---|---|---|
| Secondary threshold | £5,000 | Employer NI at 15% applies above this |
| Lower Earnings Limit | £6,708 | Earning at least this builds a qualifying year for State Pension |
| Primary threshold | £12,570 | Employee NI at 8% applies above this |
| Personal allowance | £12,570 | Income tax-free amount for most people |
Common reference points
- £6,708 (Lower Earnings Limit): builds a State Pension qualifying year, but means employer NI of 15% on the £1,708 above the secondary threshold unless the Employment Allowance can be claimed.
- £12,570 (primary threshold): no employee NI or income tax, if this is the director's only income, but more employer NI. The salary and employer NI are normally deductible for Corporation Tax.
Which works best depends on the company's profits, Corporation Tax rate, other income, and whether the Employment Allowance is available. That's a conversation for your accountant. We'll run whichever salary you agree.
The Employment Allowance trap
Companies where the director is the only employee paid above the secondary threshold generally can't claim the Employment Allowance. See GOV.UK's eligibility rules.
Directors' National Insurance is calculated differently
Directors use an annual earnings period for National Insurance, so NI is worked out on cumulative pay across the year rather than period by period. Payroll software must be set up correctly for this, which is one of the most common director payroll errors we fix.
Our director-only payroll is £16.50 + VAT per month.